How Do I Get Laundromat Financing?

So you’ve made all the relevant decisions necessary to buy or open a new laundromat. You know where you want to be, you have an idea about equipment, and maybe you even have a business plan in place.

The one thing you don’t have is financing, and that may be the most important thing. Without proper laundromat financing, even the best and most thought-out business plans won’t get off the ground.

So what do you need to know about financing a laundromat? Laundry One can’t help you file all the paperwork or deal with a bank, but we can help set you on the right track.

Financing a Laundromat With Cash

Naturally, if you’re swimming in enough liquid capital to just make cash purchases on a property and all of your commercial laundry equipment and parts, then you don’t really need to worry about financing your laundromat – though in some cases it might make sense to do so anyway.

But this isn’t about the high-rollers with those kinds of assets – this is about the fact that no matter how you go about financing your laundromat, you’re probably going to need some cash equity. Just like buying a house or a car, you frequently will need what amounts to a down payment on your investment.

This isn’t always the case, but in general, having cash on hand to put some equity into your laundromat financing can only help.

Bank Loan Financing for a Laundromat

This is about as conventional as it gets – a business loan from the bank is probably the first thing you considered when thinking about your laundromat financing plans.

This is one of the most stable and typical routes to financing your laundromat. Banks generally offer the best interest rates available, and that rate can be even lower if you qualify for a Small Business Administration-backed loan.

Banks are also a good place to apply if you want an honest risk assessment of your investment – their appraisal of your business plan can be a good indication of whether you’re on the right track.

The downside of obtaining bank financing for your laundromat is that this is by far the most complicated and tedious process you can go through. There’s lots of paperwork, an extended approval process, and lots of red tape all over the place. And at the end of all that, there’s a reasonable chance that your loan will be denied.

You may sometimes need as much as 40 percent of your total loan amount as a down payment, which is a very hefty sum, and may make you wonder why you’re applying at all, if you already have nearly half of what you need for laundromat financing on hand in cash!

That’s okay, you have other options.

Seller Financing of a Laundromat

This only applies if you’re financing a laundromat that already exists – obviously, if you’re starting a laundromat from scratch, there’s nobody to sell one to you!

However, in the cases where a laundromat owner is looking to sell, and they own the property with little or no debt, they may simply finance the property themselves!

This is beneficial for a number of reasons. It allows you both to avoid most of the banking and lender fees associated with traditional laundromat financing, the buyer typically gets in with a smaller (or no) down payment, and the seller gets to enjoy not only collecting the purchase price of the property but also the interest.

In addition, since both parties are interested in the success of the property, it makes it easier to negotiate terms that contribute to your success after the purchase. The biggest drawback here is that it requires you to be actually buying an existing laundromat from a seller, and that seller has to actually be interested in financing the sale, rather than accepting a lump-sum cashout.

As a halfway measure, you may be able to get a seller to finance a portion of the sale, with a bank or lending institution covering the remainder, which can help lessen your up-front investment.

Private Financing for your Laundromat

There are other options for laundromat financing outside of the traditional banks and seller financing – many private agencies can help you with financing your laundromat, and Laundry One is among them! We’re happy to offer a quote for the equipment you need, and if you need financing, we can do that too!

If you’re interested in financing commercial laundry equipment from us for your laundromat, contact us today for pre-approval and see how we can help! If you have other questions about starting a laundromat, we offer consulting services to help you over some of the biggest hurdles you’ll face.